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FAILURE TO COMPLY WITH THE NOTICE OF DEFAULT REQUIREMENTS IN THE BUILDING-CONSTRUCTION BOND PRECLUDED RECOVERY UNDER THE BOND FOR CONSTRUCTION DELAYS (FIRST DEPT).

The First Department, in a full-fledged opinion by Justice Friedman, determined plaintiff’s failure to comply with the notice of default requirements in the building-construction bond precluded recovery under the bond for construction delays:

With regard to the “trigger” of the surety’s obligation, paragraph 3 of the A312 bond provides that “the Surety’s obligation under this Bond shall arise after” … the beneficiary of the bond (1) has notified the surety and the principal that it is considering declaring a default and offered to confer with the surety and the principal to discuss how to proceed, (2) has declared a default and formally terminated the principal’s right to complete the contract no earlier than 20 days after the aforementioned notice, and (3) has agreed to pay the balance of the contract price to the surety or to a new contractor chosen by the surety. * * *

​Upon [plaintiff’s] appeal, we affirm on the ground that JDS’s claim for delay damages under the 36-floor bond is barred by [plaintiff’s] failure to have complied, at any time before the bonded work had been completed, with the condition precedent of the notice and termination procedures specified in paragraph 3 of the bond. JDS Dev. LLC v Parkside Constr. Bldrs. Corp., 2024 NY Slip Op 04227, First Dept 8-15-24

Practice Point: Compliance with the notice of default provisions in an A312 building-construction bond is a condition precedent to recovery under the bond for construction delays.​

 

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